For personal use only

Transcription

1 BIOXYNE LIMITED ABN The Companies Announcements Office, The Australian Stock Exchange Limited, SYDNEY Via: asxonline Date: 31 August 2015 APPENDIX 4E The results for announcement to the market are as follows:- 1. The reporting period is twelve months to 30 June The previous reporting period was twelve months to 30 June Key information relating to the above reporting periods is as follows:- 30 June June 2014 Percentage Change $ $ Revenue from ordinary activities 1,653,274 3,327,039 (50%) Profit/ (Loss) from ordinary activities after tax attributable to members* 201,039 1,190,827 (83%) Net Profit/( loss) attributable to members 201,039 1,190,827 (83%) Proposed dividend - - Net tangible assets per issued security NMF * The large movement in the profit from ordinary activities after tax is partly attributable to the disposal of former subsidiary Hunter Immunology Pty Limited (HIPL), which was completed on 24 February 2014, and recorded a profit on disposal of $929, to 9. See attached financials. 10. No acquisition or disposal of any entity occurred during the financial year. 11. There are no associates or joint venture entities. 12. The Company is not a foreign entity. 13. See commentary and the attached financials. 14. The financial statements are subject to the completion of the audit. 1

2 COMMENTARY ON RESULTS FOR THE PERIOD REVENUE The company continued to export probiotics into the international market in FY Sales for FY 2014 were significantly higher than FY 2015 as our major customer was selling into China in 2014 requiring a build -up of inventory for that year. The decline in sales in FY 2015 reflected a normalised year of demand from that major customer. Other revenue in FY 2014 was proceeds from disposal of the subsidiary Hunter Immunology Pty Limited. Included in Other Income was royalties and foreign exchange gains of $153,123 (2014: $86,503). The increase in other income was largely a result of currency gains of $132,863 from the company s holdings in US and Euro currencies. Royalty income reduced year on year as a result of prior year receipts also being part of an inventory build-up in FY Royalty income is receivable on a lagged basis. EXPENDITURE Operating expenses were consistent with the reduced level of sales activities. The company continues to operate with a lean management structure. The company invested in marketing and business development expenses associated with the review of the company s probiotic business. Professional and legal fees are significantly reduced in the FY Transaction costs were incurred on the disposal of Hunter Immunology Pty Limited in FY BALANCE SHEET This Appendix 4E is subject to finalisation of the audit of the financial statement and issue of the auditors report. RSM Bird Cameron, the company s auditors advised that they would likely issue a qualification to their audit report relating to the carrying value of the company s investment in Mariposa Health Limited of $325,000 (at cost) as to the valuation and recoverability of that investment. Mariposa Health Limited is currently going through a listing process on the New York Stock Exchange (Over the Counter market). The directors believe that the proper determination of the fair value of the investment in Mariposa Health Limited can only be measured when it begins trading on the New York OTC market within the next few months. The directors are of the view that It is not in the best interest of current shareholders to prematurely impair the carrying value of the investment as at 30 June CASHFLOW The net cash outflow for FY 2015 as reported on page 6 was $166,772. As reported in our Appendix 4C lodged with the ASX on 30 July 2015, a payment of $101,000 was made in the June 2015 quarter for accumulated prior year s royalties. 2

3 Statement of Profit or Loss and Other Comprehensive Income Notes $ $ Revenue from continuing operations Sale of goods 1,492,109 2,305,227 Other income 2(iv), 3 161,165 1,021,812 Cost of goods sold (726,584) (1,241,531) Expenses Business development (67,941) - Marketing (96,718) - Professional fees (199,677) (394,694) Compliance costs (80,967) (117,902) Legal fees (9,537) (51,809) Employee benefits (153,065) (176,962) General and administration (116,334) (141,989) Finance costs (1,412) (11,325) Profit before income tax 201,039 1,190,827 Income tax (expense) Other comprehensive income for the year - - Total comprehensive profit for the year 201,039 1,190,827 Profit is attributable to: Members of 201,039 1,190,827 Earnings per share From continuing operations - Basic/diluted earnings per share From discontinued operations - Basic/diluted earnings per share The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 3

4 Statement of Financial Position As at 30 June Notes $ $ ASSETS Current Assets Cash and cash equivalents 5 958, ,378 Current tax receivables 6 19,520 20,188 Trade and other receivables 7 210, ,606 Total Current Assets 1,188,037 1,174,172 Non-Current Assets Other financial assets 8 325, ,000 Property plant and equipment Total Non-Current Assets 325, ,000 Total Assets 1,513,037 1,499,172 LIABILITIES Current Liabilities Trade and other payables , ,257 Total Current Liabilities 229, ,257 Total Non-Current Liabilities - - Total Liabilities 229, ,257 Net Assets 1,283,666 1,071,915 EQUITY Contributed equity 13 57,426,940 57,426,940 Reserves 14 10, ,304 Accumulated losses 14 (56,153,986) (56,478,329) Equity 1,283,666 1,071,915 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 4

5 Statement of Changes in Equity Contributed Accumulated Reserves Total equity Losses Notes $ $ $ $ 2014 At 30 June ,126,933 (28,977,942) 640,280 (210,729) Effect of disposal of HIPL 2(ii) 28,974,010 (29,401,695) 70,200 (357,483) Total comprehensive income for the year - 1,190,827-1,190,825 Contributions of equity, net of transaction costs 325, ,997 Options issued during the year , ,305 Options cancelled during the year - 710,481 (710,481) - At 30 June ,426,940 (56,478,329) 123,304 1,071, At 30 June ,426,940 (56,478,329) 123,304 1,071,915 Total comprehensive income for the year - 201, ,039 Options issued during the year ,712 10,712 Options cancelled during the year - 123,304 (123,304) - At 30 June ,426,940 (56,153,986) 10,712 1,283,666 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. 5

6 Statement of Cash Flows Notes $ $ Cash flows from operating activities Receipts of other income (inclusive of goods and services tax) 1,464,029 2,377,705 Payments to suppliers and employees (inclusive of goods and services tax) (1,637,425) (2,136,109) (173,396) 241,596 Research and development tax rebate - 370,785 Finance charges (1,412) (11,325) Interest received 8,036 5,701 Net cash inflow/(outflow) from operating activities 18 (166,772) 606,757 Cash flows from investing activities Proceeds from disposal of HIPL - 175,000 Net cash inflow from investing activities - 175,000 Net cash inflow from financing activities - - Net increase/(decrease) in cash and cash equivalents (166,772) 781,757 Cash and cash equivalents at the beginning of the financial year 992, ,621 Foreign exchange adjustment to cash balance 132,863 - Cash and cash equivalents at end of the year 5 958, ,378 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 6

7 1 Summary of significant accounting policies These financial statements and notes represent those of (the Company ) (a) Basis of preparation Reporting Entity is a company limited by shares, incorporated and domiciled in Australia. The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standard Board and the Corporations Act Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs, except for selected financial assets for which the fair value basis of accounting has been applied. Critical accounting estimates and judgements Critical estimates and judgements are evaluated by the Directors and incorporated into the financial report based on historical knowledge and best available current information. These estimates assume a reasonable expectation of future events and are based on trends and economic data obtained externally and within the Company. The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2. Comparative information is reclassified where appropriate to enhance comparability. 7

8 1 Summary of significant accounting policies (continued) (b) Foreign currency translation (i) Functional and presentation currency The functional and presentation currency of the Company is Australian dollars (A$). Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the end of the reporting period. Foreign exchange gains and losses resulting from settling foreign currency transactions, as well as from restating foreign currency denominated monetary assets and liabilities, are recognised in profit or loss, except when they are deferred in other comprehensive income as qualifying cash flow hedges or where they relate to differences on foreign currency borrowings th at provide a hedge against a net investment in a foreign entity. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined. Items included in the financial statements of the Company s operations are measured using the currency of the primary economic environment in which it operates ( the functional currency ). The financial statements are presented in Australian dollars, which is the Company s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive income. (c) Revenue recognition Interest income Interest income is recognised as interest accrues using the effective interest method. The effective interest method uses the effective interest rates which is the rate that exactly discounts the estimated future cash receipts over the expected future l ife of the financial asset. When a receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans i s recognised using the original effective interest rate. Sale of goods Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods. 8

9 1 Summary of significant accounting policies (continued) (d) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit and loss over the period necessary to match them with the costs that they are intended to compensate. (e) Income tax The income tax expense or revenue for the period is the tax payable on the current period s taxable income based on the income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit. Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries, associated and interests in joint ventures where the parent entity is able to control the timing of the reversal of the temporary differences and i t is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. 9

10 1 Summary of significant accounting policies (continued) (f) Fair Value of Assets and Liabilities The Company measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liab ility (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity s own equity instruments (excluding those related to sh are-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instrument, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. (g) Leases Leases where the lessor retains substantially all of the risks and rewards of ownership of the net asset are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit and loss on a straight-line basis over the period of the lease. (h) Impairment of assets At the end of each reporting period the Company assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to their pres ent value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable amount is determined for the cash generating unit to which the asset belongs. 10

11 1 Summary of significant accounting policies (continued) (i) Cash and cash equivalent For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank, deposits held at call with financial institutions, other short-term, highly liquid investments with maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. (j) Other receivables Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Other receivables are generally due for settlement within 30 days. Collectability of other receivables is assessed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance made for doubtful debts is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms. Objective evidence of impairment include financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue). The amount of the impairment loss is recognised in the Statement of Comprehensive I ncome within other expenses. When a trade or other receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the Statement of Comprehensive Income. (k) Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Company prior to the year end and which are unpaid. These amounts are unsecured and are usually paid within 30 days of recognition. (l) Provisions Provisions for legal claims, service warranties and make good obligations are recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. (m) (i) Employee benefits Wages and salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the end of the reporting period are recognised in other payables in respect of employees' services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled. 11

12 1 Summary of significant accounting policies (continued) (ii) Retirement benefit obligations The Company does not maintain a company superannuation plan. The Company makes fixed percentage contributions for all Australian resident employees to complying third party superannuation funds and for US resident employees to complying pension funds. The Company's legal or constructive obligation is limited to these contributions. Contributions to complying third party superannuation funds and pension plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (iii) Share - based payments The fair value of options granted under the Hunter Immunology Limited Employee Option Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the Statement of Comprehensive Income with a corresponding adjustment to equity. Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase in fair value of the transaction as a result of the change. Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital. (n) Contributed equity Costs directly attributable to the issue of new shares are shown as a deduction from the equity as a deduction proceeds net of any income tax benefit. Costs directly attributable to the issue of new shares or options associated with the acquisition of a business are incl uded as part of the purchase consideration. 12

13 1 Summary of significant accounting policies (continued) (o) Goods and services tax (GST) Revenues, expenses and assets are recognised net GST, except where the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. (p) Plant and equipment Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset s employment and subs equent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are i ncurred. Depreciation The depreciable amount of all fixed assets is depreciated on a diminishing value basis over the asset s useful life to the company commencing from the time the asset is held ready for use. Depreciation is calculated on a diminishing-value basis over the estimated useful life of the assets as follows: Plant and equipment ranging from 2 to 20 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. 13

14 1 Summary of significant accounting policies (continued) (q) Financial liabilities and equity instruments Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company s own equity instruments. Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit and loss ( FVTPL ) or other financial liabilities. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: it has been acquired principally for the purpose of repurchasing it in the near term; or on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or it is a derivative that is not designated and effective as a hedging ins trument. A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or 14

15 1 Summary of significant accounting policies (continued) it forms part of a contract containing one or more embedded derivatives, and AASB 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL. Financial liabilities at FVTPL are stated at fai r value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the other gains and losses line item in the Statement of Comprehensive Income. Other financial liabilities Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carryi ng amount on initial recognition. De-recognition of financial liabilities The Company de-recognises financial liabilities when, and only when, the Company s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. (r) Trade and other receivables Trade and other receivables are stated at their cost less an allowance for impairment of receivables. (s) New and amended accounting standards adopted by the Company At the date of authorisation of the financial statements the following standards and interpretations have been applied where applicable; AASB Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities AASB Amendments to AASB 136 Recoverable Amount Disclosures for Non-Financial Assets AASB Amendments to Australian Accounting Standards Investment Entities AASB Amendments to Australian Accounting Standards (Part A: Annual Improvements and Cycles) 15

16 1 Summary of significant accounting policies (continued) (t) New and amended accounting standards for application in future periods The following Standards and Interpretations listed below were on issue but not yet effective: Standard/Interpretation AASB 9 Financial Instruments and amendments to Australian Accounting Standards arising from AASB 9 The key changes made to the Standard that may affect the Company on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of AASB 9, the application of such accounting would be largely prospective. The directors do not anticipate that the adoption of AASB 9 will have a significant impact on the Company s financial instruments. AASB15 Revenue from Contracts with Customers AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and some revenue-related Interpretations: establishes a new revenue recognition model changes the basis for deciding whether revenue is to be recognised over time or at a point in time provides new and more detailed guidance on specific topics (e.g., multiple element arrangements, variable pricing, rights of return, warranties and licensing) expands and improves disclosures about revenue The entity is yet to undertake a detailed assessment of the impact of AASB 15. However, based on the entity s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted for the year ending 30 June Effective for annual reporting periods beginning on or after Expected to be initially applied in the financial year ending 1 January June January June

17 1 Summary of significant accounting policies (continued) AASB Amendments to Australian Accounting Standards Part D of AASB makes consequential amendments arising from the issuance of AASB 14. When these amendments become effective for the first time for the year ending 30 June 2017, they will not have any impact on the entity. Part E of AASB makes amendments to Australian Accounting Standards to reflect the AASB s decision to defer the mandatory application date of AASB 9 Financial Instruments to annual reporting periods beginning on or after 1 January Part E also makes amendments to numerous Australian Accounting Standards as a consequence of the introduction of Chapter 6 Hedge Accounting into AASB 9 and to amend reduced disclosure requirements for AASB 7 Financial Instruments: Disclosures and AASB 101 Presentation of Financial Statements. Refer to the section on AASB 9 above. AASB Amendments to Australian Accounting Standards Accounting for Acquisitions of Interests in Joint Operations The amendments to AASB 11 state that an acquirer of an interest in a joint operation in which the activity of the joint operation constitutes a business, as defined in AASB 3 Business Combinations, should: apply all of the principles on business combina tions accounting in AASB 3 and other Australian Accounting Standards except principles that conflict with the guidance of AASB 11. This requirement also applies to the acquisition of additional interests in an existing joint operation that results in the acquirer retaining joint control of the joint operation (note that this requirement applies to the additional interest only, i.e., the existing interest is not remeasured) and to the formation of a joint operation when an existing business is contributed to the joint operation by one of the parties that participate in the joint operation; and provide disclosures for business combinations as required by AASB 3 and other Australian Accounting Standards. When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the transactions and balances recognised in the financial statements. 1 January June January June

18 1 Summary of significant accounting policies (continued) AASB Amendments to Australian Accounting Standards Clarification of Acceptable Methods of Depreciation and Amortisation 1 January June 2017 The amendments to AASB 116 prohibit the use of a revenue-based depreciation method for property, plant and equipment. Additionally, the amendments provide guidance in the application of the diminishing balance method for property, plant and equipment. The amendments to AASB 138 present a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. This rebuttable presumption can be overcome (i.e., a revenue-based amortisation method might be appropriate) only in two (2) limited circumstances: i. The intangible asset is expressed as a measure of revenue, for example when the predominant limiting factor inherent in an intangible asset is the achievement of a revenue threshold (for instance, the right to operate a toll road could be based on a fixed total amount of revenue to be generated from cumulative tolls charged); or ii. When it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. When these amendments are first adopted for the year ending 30 June 2017, there will be no materi al impact on the transactions and balances recognised in the financial statements. AASB Amendments to Australian Accounting Standards arising from AASB 15 AASB incorporates the consequential amendments arising from the issuance of AASB 15. Refer to the section on AASB 15 above. AASB Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) AASB incorporates the consequential amendments arising from the issuance of AASB 9. Refer to the section on AASB 9 above. AASB Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) Application of AASB 9 (December 2009) and AASB 9 (December 2010) AASB limits the application of the existing versions of AASB 9 (AASB 9 [December 2009] and AASB 9 [December 2010]) from 1 February Refer to the section on AASB 9 above. 1 January June January June January June

19 1 Summary of significant accounting policies (continued) AASB Amendments to Australian Accounting Standards Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 1 January June 2017 The amendments address a current inconsistency between AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures (2011). The amendments clarify that, on a sale or contribution of assets to a joint venture or associate or on a loss of control when joint control or significant influence is retained in a transaction involving an associate or a joint venture, any gain or loss recognised will depend on whether the assets or subsidiary constitute a business, as defined in AASB 3 Business Combinations. Full gain or loss is recognised when the assets or subsidiary constitute a business, whereas gain or loss attributable to other investors interests is recognised when the assets or subsidiary do not constitute a business. This amendment effectively introduces an exception to the general requirement in AASB 10 to recognise full gain or loss on the loss of control over a subsidiary. The exception only applies to the loss of control over a subsidiary that does not contain a business, if the loss of control is the result of a transaction involving an associate or a joint venture that is accounted for using the equity method. Corresponding amendments have also been made to AASB 128 (2011). When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the financial statements. AASB Amendments to Australian Accounting Standards Annual Improvements to Australian Accounting Standards Cycle 1 January June 2017 These amendments arise from the issuance of Annual Improvements to IFRSs Cycle in September 2014 by the IASB. Among other improvements, the amendments clarify that when an entity reclassifies an asset (or disposal group) directly from being held for sale to being held for distribution (or vice-versa), the accounting guidance in paragraphs of AASB 5 Non-current Assets Held for Sale and Discontinued Operations does not apply. The amendments also state that when an entity determines that the asset (or disposal group) is no longer available for immediate distribution or that the distribution is no longer highly probable, it should cease held-fordistribution accounting and apply the guidance in paragraphs of AASB 5. When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the financial statements. 19

20 1 Summary of significant accounting policies (continued) AASB Amendments to Australian Accounting Standards Disclosure Initiative: Amendments to AASB January June 2017 The amendments: clarify the materiality requirements in AASB 101, including an emphasis on the potentially detrimental effect of obscuring useful information with immaterial information clarify that AASB 101 s specified line items in the statement(s) of profit or loss and other comprehensive income and the statement of financial position can be disaggregated add requirements for how an entity should present subtotals in the statement(s) of profit and loss and other comprehensive income and the statement of financial position clarify that entities have flexibility as to the order in which they present the notes, but also emphasise that understandability and comparability should be considered by an entity when deciding that order, and remove potentially unhelpful guidance in IAS 1 for identifying a significant accounting policy. When these amendments are first adopted for the year ending 30 June 2017, there will be no material impact on the financial statements. AASB Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality The Standard completes the AASB s project to remove Australian guidance on materiality from Australian Accounting Standards. When this Standard is first adopted for the year ending 30 June 2016, there will be no impact on the financial statements. 1 July June Critical accounting estimates and judgement (i) Options Fair values of options granted are independently determined using the Black-Scholes option pricing model at grant date. Refer to Note 23 (b) for more information on the inputs used to determine the fair value of the options. The options issued to directors in the year under the employee share option plan vested immediately on issue and an expense has been recognised in the year for the issue. (ii) Disposal of Hunter Immunology Pty Limited (HIPL) by (BXN) On 4 April 2012, BXN acquired HIPL. The transaction was considered to be a reverse acquisition of BXN by HIPL under AASB 3 Business Combinations. The reverse acquisition accounting treatment had the following effects on the 2014 financial statements of BXN per AASB3.B22: 20

21 The consolidated equity balance reflected the pre-acquisition equity balances of HIPL; The consolidated share equity balance equal led the pre-acquisition equity of HIPL plus the fair value of BXN; The equity structure of the consolidated entity reflected the equity structure of BXN in the Note disclosures. In 2014 BXN disposed of HIPL, which resulted in adjustments to equity balances to reflect the equity balances of the consolidated entity with BXN as the parent for accounting and legal purposes as at 30 June This adjustment was required because the closing equity balances at 30 June 2013 reflected those of HI PL as the accounting parent in the group. The effect on the equity balance of the group has been disclosed in the Consolidated Statement of Changes of Equity under Effect of Disposal of HI PL. (iii) Consideration transferred for divestment Included in the consideration for the disposal of HIPL were 1,969,697 shares which were issued at an issue price of 16.5 cents per share amounting to $325,000. The directors satisfied themselves that the issue price of $325,000 approximated fair value at the time of the transaction. In additional to the above, part of the total consideration paid to BXN for the disposal of HIPL included a deferred consideration of $1million, payable on achievement of agreed milestones over the next 5 years. This was not been reported in the financial statements. The deferred consideration will be recognised as and when it is received. The deferred consideration also includes an obligation to pay royalties, which is agreed to be 6.5% of the gross revenue received by the company, MHL or related entities in respect to the sale of the sublicensing or Intellectual property rights, including any sale proceeds or Sub-Royalties. To the extent that products are manufactured based on the intellectual property, royalties are calculated as 2% of Gross revenue. Further to the above, the parties also agreed that any tax benefit including Research and Development Tax Incentive from the ATO or other government organisation after the date of completion, that relates to expenditure prior to the completion date when received by the company will be payable to BXN in the following proportion: 75% to the Vendor (BXN) and; 25% to the purchaser (MHL). At reporting date BXN is not aware of whether there is any tax benefit due. (iv) Gain on sale The large movement in the profit from ordinary activities after tax is attributable to the disposal of Hunter Immunology Pty Limited (HIPL), which was completed on 24 February The gain on sale as calculated and disclosed at Other income (Note 3) was a one off revenue $929,607 which consisted of the $500,000 in total consideration received in the 2014 year and reversals of accounting revaluations of impairments to goodwill that had taken place in the 2012 and 2013 FY s as required by AASB 3 when considering the deconsolidation of a subsidiary. 21

22 3 Other income $ $ Gain on disposal of HIPL - 929,607 Interest received 8,036 5,702 Other income royalties and foreign exchange 153,129 86, ,165 1,021,812 Gain on disposal of HIPL The gain on sale in the 2014 financial year was calculated was a one off revenue $929,607 which consisted of the $500,000 in total consideration received throughout the year and reversals of accounting revaluations of impairments to goodwill that had taken place in the 2012 and 2013 FY s as required be AASB 3 when considering the deconsolidation of a subsidiary. 4 Income tax benefit (a) Income tax benefit Deferred tax (b) Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax expense 201,039 1,190,827 Tax at the Australian tax rate of 30% ( %) 60, ,248 Tax effect of amounts which are not (taxable)/deductible in calculating taxable income (97,320) (111,569) De-recognition of tax benefit on carried forward losses - - Tax (expense)/benefit not recognised - - Carried forward tax benefit not recognised/(applied) in the current year 37,008 (245,679) Total income tax expense - - * The carried forward tax benefit applied in the 2014 year of $245,679 represented the income tax due but not payable as a result of the application of prior year losses available to the Company. The carried forward tax benefit not recognised in the 2015 year of $37,008 represents an income tax loss not recognised on the balance sheet due to the company s policy with regard to the recognition of deferred tax assets (Note 1(e)). (c) Tax losses Unused tax losses for which no deferred tax asset has been recognised 26,493,525 26,370,163 Potential tax 30% 7,948,057 7,911,049 5 Current assets - Cash and cash equivalents Cash at bank and in hand 958, , , ,378 Cash at bank and in hand is non-interest bearing. 22

23 6 Current assets Current tax receivables $ $ Current tax receivable 19,520 20,188 7 Current assets Trade and other receivables 19,520 20,188 Trade debtors 172, ,924 Prepayments 37,975 40, , ,606 8 Other financial assets Non-current Available-for-sale financial assets 325, , , ,000 (a) Available-for-sale financial assets Unlisted investments, at fair value: - shares in other corporations 325, ,000 Total available-for-sale investments at fair value 325, ,000 9 Goodwill Cost - - Accumulated impairment losses Cost Balance at beginning of year - 1,511,132 Amounts de-recognised from disposal of subsidiary - (1,511,132) Balance at end of year - - Accumulated impairment losses Balance at beginning of year - (1,511,132) Amounts de-recognised from disposal of subsidiary - 1,511,132 Balance at end of year De-recognition of Goodwill - - On the sale of Hunter Immunology Pty Limited (HIPL) in the 2014 financial year, the company derecognised the recorded goodwill from the reverse acquisition in the 2012 financial year. The goodwill was previously fully impaired in the 2012 financial year. 23

24 $ $ 10 Property, plant and equipment Office equipment at cost 25,978 25,978 Accumulated depreciation (25,978) (25,978) - - Balance at beginning of year - 1,147 Disposed of in business combination - (1,147) Depreciation - - Balance at end of year Current liabilities - Trade and other payables Trade payables 130, ,228 Accrued expenses 98, , , , Deferred tax assets and liabilities Deferred tax assets Total deferred tax assets - - Movement in deferred tax assets Opening balance 1 July 2014/ De-recognition of deferred tax assets written off to profit and loss - - Closing balance 30 June 2015/ Contributed equity (a) Shares $ Shares $ Share capital Ordinary Shares Fully Paid 200,343,101 57,426, ,343,101 57,426,940 24